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Investment abroad and labour adjustment at home: evidence from UK multinational firms

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  • Helen Simpson

Abstract

This paper provides new evidence on the effects of overseas FDI on the skill-mix of multinational firms' home-country operations. The analysis exploits China's WTO accession to identify the impact of outward investment into a low-wage economy and uses plant-level data to investigate changes in industrial structure within firms driven by plant closures. As predicted by models of vertical FDI, the paper demonstrates that overseas investment in low-wage economies is associated with asymmetric effects on workers in low- and high-skill industries in the home economy and, in particular, with firms closing down plants in low-skill industries. JEL classification: F2

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  • Helen Simpson, 2012. "Investment abroad and labour adjustment at home: evidence from UK multinational firms," Canadian Journal of Economics, Canadian Economics Association, vol. 45(2), pages 698-731, May.
    • Handle: RePEc:cje:issued:v:45:y:2012:i:2:p:698-731
    DOI: 10.1111/j.1540-5982.2012.01712.x
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    Cited by:

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    2. Manderson, Edward J. & Kneller, Richard, 2020. "Energy endowments and the location of manufacturing firms," Journal of Environmental Economics and Management, Elsevier, vol. 101(C).
    3. Boehm, Christoph E. & Flaaen, Aaron & Pandalai-Nayar, Nitya, 2020. "Multinationals, Offshoring, and the Decline of U.S. Manufacturing," Journal of International Economics, Elsevier, vol. 127(C).
    4. Keiko Ito & Kenta Ikeuchi, 2017. "Overseas Expansion and Domestic Business Restructuring in Japanese Firms," The Developing Economies, Institute of Developing Economies, vol. 55(2), pages 75-104, June.
    5. Tsou, Meng-Wen & Liu, Jin-Tan & Hammitt, James K. & Chang, Ching-Fu, 2013. "The impact of foreign direct investment in China on employment adjustments in Taiwan: Evidence from matched employer–employee data," Japan and the World Economy, Elsevier, vol. 25, pages 68-79.
    6. repec:wsr:ecbook:2013:i:v-001 is not listed on IDEAS

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    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business

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